Previous research has largely ignored how business process digitalization across the value chain enhances firm innovation. This article examines the relationship between the extensiveness of business process digitalization (BPD) and new product development (NPD) in a sample of 85 small U.S. manufacturers. Scores of extensiveness was derived from the number of adopted e-business practices regarding inter and intra-firm activities such as: customer and supplier services (computer-aided design and manufacturing), employee services (education/training), and industry scanning (technology sourcing). We found that (1) NPD is positively related to the extensive use of BPD, and (2) the relationship between NPD and the extensiveness of BPD is stronger in more mature firms than that in younger firms. We conclude that small and medium-sized enterprise (SME) production innovation strategies are positively associated with the strategic use of BPD and span spatial, temporal, organizational, and industry boundaries thus aiding SME global competitiveness.
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